Kraken CEO criticizes Tornado Cash sanctions

Kraken CEO Jesse Powell has objected to recent U.S. sanctions against addresses related to the Tornado Cash parts mixer.

Jesse Powell argued in an interview with Bloomberg TV today that individuals “have a right to financial privacy” and stated that many people use Tornado Cash for legitimate reasons.

He also questioned whether the sanctions would stand up to a constitutional challenge, referring to the Coin Center’s plan to sue the Treasury and OFAC over free speech issues.

However, Powell believes that the community’s reaction may be overblown. He said that while the removal of Tornado Cash’s GitHub code was not necessary, he does not see these events as a sign of a broader attack on open-source projects.

Instead, he suggested that the sanctions were a “knee-jerk reaction” and a “hasty answer“to the TerraUSD collapse, adding that regulators overreacted with the intent to protect the public.

Jesse Powell also confirmed that, despite his objections, Kraken will block transactions to and from addresses linked to Tornado Cash addresses. “We would prohibit withdrawals to any address associated with Tornado and would likely freeze any funds from a Tornado address“, Powell told Bloomberg.

Powell’s opposition to sanctions is expected given his past resistance to excessive regulation. In February, he criticized the Canadian government’s emergency measures targeting crypto-currency exchanges. That same month, he refused to freeze Russian accounts at the request of Ukrainian Deputy Prime Minister Mykhailo Fedorov.

Powell isn’t the only crypto executive to criticize the sanctions against Tornado Cash. Coinbase’s CEO Brian Armstrong and Circle CEO Jeremy Allaire have also criticized the sanctions on the grounds that they target a tool rather than a person or entity.

The U.S. Treasury imposed sanctions on Tornado Cash addresses for the first time on August 8. A developer, Alexey Pertsev, was arrested by Dutch authorities on August 12.